I think the market reaction is going to be more about how much weight the market puts into S&P's rating system than about anything else.

After their AAA subprime ratings leading up to 2008, it may not be so great.

Also, as someone said on Bloomberg - this is going to be seen strictly as a Political move by S&P UNLESS they start to downgrade other countries like France too. European Central Banks are holding lot worse crap than the US Fed Reserve (Greek bonds anyone?), so they should get downgraded too. And the list goes on - and on - and on -

Unless it was strictly a politically motivated downgrade.

Also - who made that $billion dollar bet it would happen? Looks like insider trading to me.......